- The mid-term view remains bullish for equity markets, though some overbought conditions were corrected this week, improving the risk/reward. The main risk is a trading range forming rather than a large sell-off.
- Technical targets for the Stoxx 600 and S&P 500 are approaching major resistance levels. The upward cycle may end once targets are reached, leading to a more erratic period.
- The MSCI China is breaking out potentially. The euro could rise further above 1.3 against the dollar. The bund future is still bearish below 139 support. Spain 10-year yields remain bullish above 5%. Gold in euros breaks to a new all-time high.
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Mid-Term Bullish View Remains for Equity Markets
1. Equities
-Our mid-term bullish view is that equity markets haven’t already seen their highs and that
the risk/reward ratio sill favours the upside provided by the mid-term uptrend over the risk
of a short term correction.
-This week overbought conditions and excess optimism were corrected and the risk/return
is now good to add long position. For this month, as the Macd daily is still bearish, the
main risk for us is to built a trading range (for instance SX5e between 2400 and 2600) not
to start a massive sell off.
-Our next technical targets for the Stoxx 600 (287,296) are very close to major resistances
zone.(slide 2)
The S&P 500 (slide 3) has not much resistances until the 2000 and 2007 peaks. (1552-
1576).
-Around those technical levels, the upward cycle which began in June could be ending
because most of the technical targets would have been achieved and equity markets may
enter into a more random, erratic period.
-MSCI China breakout? (slide 4)
-Bonds&Currencies&Commodities
-After a healthy pull-back, the €/$ could rise further above 1.3. (slide 4 )
-The (generic) bund future has tested its recent breakdown, we still mid- term bearish
waiting for a decisive breakdown of the 139 level for the December contract. (slide 5)
Stay bull for the Spanish 10 year, the minimum head and shoulders pattern target is
around 5% (slide 6 )
-Gold in € breaks to a new all time high (slide 6 )
1
2. Stoxx 600 daily and hourly
Supports:270, lower part of the
bullish channel
Resistances: 284/285,292/293
Daily chart with weekly Macd
Hourly chart with daily Macd
Holding at
support but daily
momentum still
bearish
2
3. SP500
Supports: upper part of the
“small” bullish channel, 1440.
Resistances: upper part of the
“big” bullish channel, 1550 Daily chart with weekly Macd
Hourly chart with daily Macd
Holding at support
but daily
momentum still
bearish
3